Lead futures on the Multi Commodity Exchange (MCX) have been falling gradually since the beginning of May. The price is below both 20- and 50-day moving averages and the June contract has now slipped below the support at ₹183.

Therefore, the overall bias remains bearish and the likelihood of a fall from the current level is high. Although ₹180 is a potential support, we expect the contract to witness a price drop below this level and touch ₹175, a support, in the near term. Subsequent support is at ₹173.

On the other hand, if the contract recovers, it might rally towards the ₹184-185 price band. The 50-day moving average lies at ₹185, making is a strong barrier for the bulls. Thus, a rally beyond this level is less likely.

Trade strategy

Go short on MCX lead futures (June series) at the current level of ₹182.50. Add more shorts in case the price rises to ₹184. Place initial stop-loss at ₹186.

When the contract touches ₹178, tighten the stop-loss to ₹180. Book profits at ₹176.